Technical View: Nifty likely to consolidate, immediate target is 17,500

The Nifty closed marginally higher in choppy trade on April 3, with auto sale numbers and three-month high manufacturing data helping the benchmark index to close at 17,398, up 0.22 percent.

The index opened higher but erased the gains amid selling seen in IT and FMCG names. It saw rangebound movement (17,428-17,312) before finishing at 17,398, forming a small body negative candle on the daily chart with a long lower shadow.

"The Nifty witnessed a day of consolidation and closed with marginal gains. On the daily charts, we can observe that the Nifty for the whole day consolidated in the zone of 17,310–17,430 where the crucial Fibonacci retracement level (17,429) and the 40-day moving average (17,406) is placed," said Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas.

After a sharp-up move in the previous couple of sessions, consolidation is a healthy sign and provides an opportunity to enter for those who have missed out. The hourly momentum indicator has triggered a negative crossover, which is a sell signal, he said.

"Considering that prices are trading around a hurdle level and the momentum indicator triggering a negative crossover can lead to a consolidation," Gedia added.

Overall, the uptrend, however, is intact and the consolidation should be used to initiate fresh longs. On the upside, the immediate short-term target is placed at 17,500, he said.

The gains were supported by auto and banking names, while selling was seen in the FMCG, metal, power, oil & gas and information technology stocks.

Banking index

The Nifty Bank index opened at around 40,700 and remained in the range of 40,857 on the higher side and 40,535 on the lower side.

"The Bank Nifty has been outperforming the Nifty for the last few days, however, the week has started with a controlled positivity as the traders remained low ahead of the MPC meet. The trend will remain positive as long as the index sustains above 40,000," said Rupak De, Senior Technical Analyst at LKP Securities.

On the higher end, immediate resistance is at 41,000, above which the index may move towards 42,000 over the short term, he added.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.